Traders think it'll get way worse for Abercrombie

Mike Khouw of Dash Financial and CNBC's Melissa Lee get into what's behind all the bearish activity in Abercrombie & Fitch.

Over the past year, Abercrombie & Fitch shares have been anything but hot. And it appears that options traders expect it to get worse.

On Wednesday, bearish put options were very active in the name, with about 2 times the average daily put volume being traded. The most popular trade was buying the March 31-strike puts for about $1.10 each, which represents a bet that Abercrombie shares will trade below $29.90 by March expiration. That would represent a 12 percent decline from Wednesday's close.

Over the past year, Abercrombie shares have fallen 32 percent. Most of the decline came in November, on sales and earnings that badly missed analyst expectations. With the company slated to release its next earnings report Feb. 26, these trades appear to be wagering that the bad news will just keep on coming.

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